Australian Internet service providers (ISPs)
are being offered a temporary reprieve from the threat of legal action to
recover royalties for music files downloaded by Web users--but at a price.

The Internet Industry Association (IIA), the representative body for
Australian ISPs, is urging that providers each pay a fee to stop the
Australian Performing Rights Association (APRA), which collects music
royalties to distribute to artists, from using the 1958 Copyright Act to
sue them for copyright infringement.

"The Internet Industry Association strongly recommends that you join the
settlement and contribute to the development of technical and legislative
protection for the holders of intellectual property and the ISPs that
provide access to it for their subscribers," said Peter Coroneous,
executive director of the IIA, in an open letter to Australian ISPs.

The fee would be paid to OzEmail, one of Australia's largest independent ISPs, based on number of subscribers. The firm defended a legal action by APRA by negotiating a temporary settlement to pay an undisclosed amount of cash to APRA to delay its claims until new legislation was enacted to settle the situation.

OzEmail and APRA agreed to jointly lobby the Federal Government for a new
Copyright Act that "does not attribute responsibility to ISPs for material
that is available on the Internet, except in the case where the ISP is the
content provider", the letter said.

The charge for ISPs would be equivalent to their IIA membership fee, which
is based on the ISPs' revenue, ranging from $250 to $20,000.
The fee has to be paid by the end of September, and only lasts until the
end of next June or before that if covering legislation is enacted.

APRA used a precedent from a High Court test case it won against Telstra, the partly-privatised government telecommunications carrier, to take OzEmail to the Federal Court last year. It pressed its claim of charging $AUS1 per subscriber per annum as payment for music files downloaded.

In the Telstra lawsuit, dubbed the "music on hold" case, the High Court
found that Telstra was breaking the Copyright Act by playing music over
their telephone lines to customers waiting on hold, and were
forced to pay APRA.

The OzEmail case, which would have cost the ISP $AUS200,000 per year if it
had lost, already incurred $AUS50,000 in legal fees for the company.
The IIA estimates that the liability for the entire ISP industry for music
royalties might reach as high as $AUS800,000.

Many providers are not willing to pay, however, with one calling the scheme
a protection racket, and likening it to extortion by Asian "triad" gangs.
Industry mailing lists are buzzing with criticism of the plan, most of it
from small providers.

Much of the conflict between the IIA and the small ISPs dates back to the
merger of the Internet Industry Association of Australia (INTIAA) and the
Australian Internet Association (AIA), which created the IIA in July last
year.

The AIA, which counted 100 small ISPs of the estimated 450 total as members
at the time, formed as an opposing representative body to INTIAA, which
was seen as representing the big end of town.

The IIA is arguing the case directly with the ISPs, however, warning that
the precedent from the Telstra case could be far more damaging than music
royalties.

In the open letter, Coroneous said that ISPs could "find themselves
liable for hosting sites that infringe copyright in whatever form or
medium, not just music."

Coroneous also raised the possibility that if the average ISP was to be
turned into a "virtual revenue collection agency," the Australian Tax
Office might also put pressure on them to collect taxes.